\section{Introduction}
This report is written for the course Computational Finance, a master course
at the University of Amsterdam. During the lectures we have learned three
methods to price options. These methods are `The binomial tree method', `Monte
Carlo option pricing' and `Finite-difference methods for option pricing'. We
are going to explain these three methods and compare the option prices
obtained with these methods to the analytical Black-Scholes value. Something
else we have learned is to hedge options with stock to create a risk-less
portfolio. We will calculate the hedge parameters as well for all methods of
option pricing.



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